Extreme weather’s economic chill on small businesses

New polling of small business owners finds that as many as 1 in 5 have laid off workers due to extreme weather caused by climate change.

Extreme weather - a potential impact of climate change - is wreaking havoc on U.S. small businesses. Image credit: iStockphoto by Getty
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New rules proposed by the Environmental Protection Agency (EPA) to cut carbon emissions by 30 percent by 2030 have already sparked heated debate over the potential impact on U.S. businesses.

But for America’s small businesses, some of the impacts of climate change – such as the effects of extreme weather – are already clear.

Small businesses are particularly at risk from the effects of climate change and the extreme weather events they cause.
Recent data released from the U.S. Commerce Department shows the economy essentially stalled in the first quarter of 2014, with GDP growing a mere 0.1 percent. Thanks to numerous extreme weather events across the U.S., consumer spending, home building and vehicle sales were all down in the first three months of 2014. Macroeconomic Advisors, an economic research firm, estimates that elevated snowfall alone accounted for a 1.4 percent decrease in GDP.

Small Business Majority’s research shows that small businesses are particularly at risk from the effects of climate change and the extreme weather events they cause. An estimated 25 percent of small to mid-sized businesses do not reopen following a major disaster, and up to 30 percent of all small businesses affected by Hurricane Sandy failed as a direct result of the storm.

Polling by Small Business Majority found that one in five poll respondents had to lay off workers after they were negatively impacted by an extreme weather event.
Most small businesses have a single branch or location site, which makes them more vulnerable to loss compared to larger businesses that have backup resources at other facilities or locations. As a result, small businesses are more heavily impacted by power outages, the absence of employees, supply chain interruptions, rising insurance costs and more.

In addition to suffering from financial and operational damages, we found in a recent poll that a majority of small business owners said they’ve been forced to close their business or suspend operations due to an extreme weather event. Our opinion polling also found that one in five poll respondents had to lay off workers after they were negatively impacted by an extreme weather event.

Unfortunately, 2014 isn’t the first year extreme weather has caused problems. We experienced the most extreme years on record for destructive weather events during 2011 and 2012, and these storms caused more than $170 billion in damages, much of that to businesses. These extreme weather events—25 in total—each caused billions of dollars in damage to homes, roads, schools and businesses. With the intense weather we’ve been experiencing this year, 2014 looks like it might follow suit, which means hard times ahead for small businesses and our economy.

Polling finds more than half of all small businesses support the EPA limiting carbon pollution from existing power plants, and 76 percent are in favor of requiring new power plants to reduce carbon pollution.
With these events taking such a toll on small businesses, owners are starting to take note of the factors causing them. Nearly six in 10 small businesses agree climate change and the extreme weather events it creates are a problem that can disrupt the economy and hurt small employers.

That’s why the EPA’s new proposal, which would establish the first-ever carbon emissions standards for existing power plants, means good news ahead for small businesses on the clean energy front. Our polling found more than half of all small businesses support the EPA limiting carbon pollution from these plants, and 76 percent are in favor of requiring new power plants to reduce carbon pollution.

These standards are a step in the right direction, but there’s still more to be done. Policymakers should consider additional clean energy policies that can help mitigate climate change and prompt innovation—which would create opportunities for small businesses, boost the economy and help address some of the economic uncertainty we’re experiencing today—all while addressing this growing problem of extreme weather putting an economic chill on small businesses.

John Arensmeyer is the Founder and CEO of Small Business Majority, based in Washington, D.C. Follow: @SmlBizMajority

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